Gold is to the State what Sunshine was to Dracula! Here’s Why

The State is a fraud and is running out of scams and diversions. The price of gold is an existential threat to any corrupt State because it threatens the counterfeiting scheme they call money. If Statist government can be likened to Dracula (and I apologize to the late Bela Legosi for any harm done in associating his most famous role with that of of the State which will eventually be recognized as history’s greatest villain), then gold is to the State what sunshine was to Dracula. The two cannot coexist.

So says Monty Pelerin (economicnoise.com) in edited excerpts from his original article* entitled Dracula, Gold and Government.

[The following is presented by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Pelerin goes on to say in further edited excerpts:

For those interested in gold as a hedge against inflation and uncertainty, be aware that gold is manipulated for political purposes. The manipulation is illegal, but as so many other government actions, it has become accepted as a normal and necessary course of business. As conditions worsen for those in power, legality is less important than survival.

In an article** entitled The Hows and Whys of Gold Price Manipulation, Paul Craig Roberts and Dave Kranzler comment on how and why gold is manipulated.

Here is how gold manipulation occurs:

The Fed’s gold manipulation operation involves exerting forceful downward pressure on the price of gold by selling a massive amount of Comex gold futures, which are dropped like bombs either on the Comex floor during NY trading hours or via the Globex system.

A recent example of this occurred on Monday, January 6, 2014. After rallying over $15 in the Asian and European markets, the price of gold suddenly plunged $35 at 10:14 a.m. In a space of less than 60 seconds, more than 12,000 contracts traded – equal to more than 10% of the day’s entire volume during the 23 hour trading period in which gold futures trade. There was no apparent news or market event that would have triggered the sudden massive increase in Comex futures selling which caused the sudden steep drop in the price of gold. At the same time, no other securities market (other than silver) experienced any unusual price or volume movement. 12,000 contracts represents 1.2 million ounces of gold, an amount that exceeds by a factor of three the total amount of gold in Comex vaults that could be delivered to the buyers of these contracts.

This manipulation by the Fed involves the short-selling of uncovered Comex gold futures. “Uncovered” means that these are contracts that are sold without any underlying physical gold to deliver if the buyer on the other side decides to ask for delivery. This is also known as “naked short selling.” The execution of the manipulative trading is conducted through one of the major gold futures trading banks, such as JPMorganChase, HSBC, and Bank of Nova Scotia. These banks do the actual selling on behalf of the Fed.

The manner in which the Fed dumps a large quantity of futures contracts into the market differs from the way in which a bona fide trader looking to sell a big position would operate. The latter would try to work off his position carefully over an extended period of time with the goal of trying to disguise his selling and to disturb the price as little as possible in order to maximize profits or minimize losses. In contrast, the Fed’s sales telegraph the intent to drive the price lower with no regard for preserving profits or fear or incurring losses, because the goal is to inflict as much damage as possible on the price and intimidate potential buyers.

The whys of the manipulation all have to do with saving the dollar:

The $650 decline in the price of gold since it hit $1900 in September 2011 is the result of a manipulative effort designed both to protect the dollar from Quantitative Easing and to free up enough gold to satisfy Asian demands for delivery of gold purchases.

Mr. Roberts believes the significance of gold manipulation goes directly the the heart of US relevancy:

What we are witnessing is our central bank pulling out all stops on integrity and lawfulness in order to serve a small handful of banks that financial deregulation allowed to become “too big to fail” at the expense of our economy and our currency. When the Fed runs out of gold to borrow, to rehypothecate, and to loot from ETFs, the Fed will have to abandon QE or the U.S. dollar will collapse and with it Washington’s power to exercise hegemony over the world.

…According to Mr. Roberts, gold will have to be knocked back again lest our entire government and banking system be forced to deal with reality.

At some point it will be impossible to continue the price manipulation. The Chinese know this and are taking advantage of the artificially low prices we are providing them. They are buying gold as rapidly as they can…

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

The correlation between the gold price, silver price and the debt growth has been amazingly accurate since 2001. Government spends too much money to perform a few essential services and to buy votes, wars, and welfare, and thereby increases its debt almost every year, while gold and silver prices, on average, match the increases in accumulated national debt. Read More »

The price of gold, on a quarterly basis, is 86% correlated – yes, 86%! – to total government debt going back to 1975… and a shocking 98% over the past 15 years!. Despite the current rumblings, everyone is aware that the debt ceiling will be raised and will likely surpass $20 trillion by the end of President Obama’s term. That would put the price of gold at about $2,000 per ounce. Read More »

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